M&A attorneys told Law360 that AI is helping automate routine tasks, flag potential risks and draft standard documents, though they cautioned against an overreliance on "a machine" and said junior lawyers still need human guidance to ensure accuracy and compliance.
As AI in increasingly integrated into day-to-day legal work, due diligence is an area where the technology is showing some of the clearest benefits, attorneys said.
AI tools can rapidly review agreements, flag unusual clauses or compliance gaps, and integrate external sources like litigation records or regulatory filings, they said. This impacts client billing.
"AI is increasingly allowing more flexible pricing for attorney fees in an M&A transaction," said Jalpit Amin, a corporate and finance partner at Hogan Lovells. "Contract review can be significantly automated with new age AI reviewing tools, but many tools also allow tracking transaction documents and note-taking during negotiations and calls."
"These tools can quickly and efficiently analyze a target's practices to determine compliance with privacy laws and regulations across many different jurisdictions, to assess the overall risk profile of a target," he added.
Streamlining Diligence and Risk Assessment
However, attorneys cautioned that AI supplements rather than replaces judgment. They emphasized that both legal experience levels and familiarity with AI tools should govern their use.
While the technology can "quickly identify common risks across industries and assist in reviewing agreements to flag potential areas of concern," the user must ultimately make careful judgments, said Tracy Belton, co-chair of Arnold & Porter Kaye Scholer's global M&A practice.
Jonathan Henderson, innovation chair and healthcare M&A co-chair at Polsinelli, described AI's role in deal sourcing and target evaluation as being in its early stages.
He said tools like ChatGPT, Claude and Gemini can "synthesize market research and summarize industry developments," but said no single platform provides an all-in-one solution.
"Today, effective research still requires pulling from multiple sources — public filings, proprietary databases, industry reports and news feeds — because no single platform fully aggregates and analyzes private and public market data in one place," he said.
When selecting acquisition targets, AI is not just a sourcing tool. It's increasingly treated as an asset that can affect transaction value, Henderson said.
For example, buyers may consider a target's proprietary AI models or datasets when assessing risk or future earnings potential.
"Buyers are focusing more and more on AI as an asset or organization risk that needs to be understood and accounted for during the transaction," Henderson said. "This is becoming more nuanced, especially in acquisitions of tech-enabled businesses."
"The value isn't just in the AI model, but in the data it's trained on," he added. "Unique, high-quality or regulatory-compliant datasets are often valued as strategic IP."
He also noted that patents, proprietary models and in-house codebases may be considered intangible assets.
"Buyers assess whether [these assets] provide defensible competitive advantage or can be replicated cheaply," he said.
Research Shows Increased Use
According to a survey of 300 lawyers published in April by legal software company Litera and the American Bar Association's Technology in M&A Subcommittee, firms are incorporating AI into a substantial portion of transactions.
The survey, conducted by Wakefield Research, found that 51% of respondents said they use AI-based technologies in their M&A engagements, and 91% expected most deals to be AI-driven within a decade.
The numbers suggest AI has moved well beyond the experimental stage, though attorneys caution that integration requires careful training, oversight and client communication.
"AI can be a powerful assistant for seasoned attorneys, who can identify errors, spot hallucinations, and refine AI-generated language," Belton said. "But for junior lawyers, the risk is greater — they may not have the experience to know whether a provision is flawed or risky, and they may place too much trust in AI outputs."
Evan Leibhan, head of Honigman's private equity practice, urged caution, noting that AI is inconsistent.
"If you ask the same question three times, you will get three different answers," Leibhan said.
"The ones who are able to get the most out of AI are the ones who provide the right prompts and do not stop after the first prompt to continue to challenge and test the AI for the best outputs," he said. "This is not a skill that many professionals, including attorneys, have a long history [with]."
Drafting Agreements and Ethical Challenges
Attorneys noted that AI is starting to play a bigger role in the negotiation process itself, including in routine deal paperwork.
For example, tools can now handle discourse on nondisclosure agreements, even suggesting compromise language, while assisting with letter agreements or due diligence lists, Amin said.
"A powerful example is how good AI has become at negotiating NDAs in the context of M&A transactions," Amin said. "Often much of the back and forth on initial deal NDAs can be done by AI, including using AI to propose compromise positions and standard carve-outs for language."
Henderson said Polsinelli is using AI on initial drafts to find relevant precedent documents and update them based on a new transaction, for "creating a first, very rough draft," and to help refine specific provisions.
Belton also highlighted the technology's "potential in negotiation and drafting," but warned that it's not yet "at a stage where it can replace human expertise."
"I've tested products that claim to draft provisions — such as covenants — based on public precedents or documents we provide," she said. "Some say they can make a clause more buyer-friendly or seller-friendly. It can do that to a degree, but our work is rarely that cut and dry. It often requires nuanced judgment calls that AI simply isn't capable of making yet."
Data and privacy also remain major concerns. Attorneys said that when sensitive client or target information is fed into third-party AI platforms, users often have little control over how it is used.
"If sensitive client or target information is being fed into third-party AI platforms, the users often have little control over the use of that information after the information has been uploaded," Leibhan said.
He also emphasized limitations in accuracy: "The output from AI is not always accurate, up to date, or complete. There are a number of gaps still in the software, and AI is only as smart at the data that it is trained on."
Belton further warned that "overreliance on AI could diminish human judgment in areas that require nuance."
"You cannot outsource fiduciary duties or ethical obligations to a machine," she said. "Clients are going to demand that their attorneys both leverage the efficiency of AI and at the same time guarantee that the ultimate advice comes from a human professional."
Looking Ahead: the Next 2 to 3 Years
Attorneys expect AI to continue reshaping M&A practice, particularly for routine tasks like nonmaterial contract review and standardized due diligence.
"AI is not going away and will only continue to improve," Leibhan said. "We are in the early stages and AI has already transformed all knowledge-based industries. The platforms utilizing AI will continue to develop and become more sophisticated."
In general, AI is seen as an enabler rather than a replacement. Its real value lies in automating routine tasks, improving speed and scope of review, supporting drafting and negotiation, and assisting in risk assessment.
Firms are investing in training, governance and internal protocols so that attorneys and clients can use AI safely and effectively.
"As AI capabilities improve, risk tolerances will adjust, and we'll see buyers allowing AI to assume greater responsibility in specific areas where AI use leads to a better outcome," Henderson said.
Belton again took a cautious approach, but with a positive long-term view. While AI may initially complicate M&A work due to premature adoption and errors, she said it will ultimately streamline routine tasks and free lawyers to focus on higher-value deal strategy.
"Premature adoption by some attorneys … could lead to poorly drafted documents filled with errors," Belton said. "[But] once the technology matures, it can take over time-consuming, low-value tasks … allowing lawyers to focus more on complex legal analysis and creative deal structuring."
--Editing by Robert Rudinger.
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